Lucapa Moves into Diamond Manufacturing

RAPAPORT... Lucapa Diamond Company plans to cut and polish select stonesin-house in an effort to maximize value for its shareholders. Third-party manufacturers charge high fees without adding significant value, explained CEO Stephen Wetherall in a recent interview. Bypassing them - either by partnering with a manufacturer of the company's choice, or by cutting and polishing its own diamonds - would save Lucapa money, he told Rapaport News.While the miner would prefer the former solution, it has not ruled out cutting and polishing some of the diamonds itself on a standalone basis, he said. Lucapa has yet to determine the percentage of its stones it will ultimately manufacture, but Wetherall expects the figure to vary year on year.  "We are initiallyentering into the sector by looking at select or bespoke diamonds," he added. "Itmight grow down the line into other more regular sizes, but it will be selectdiamonds initially. Ideally, the strategy will incorporate select diamonds fromboth [the Lulo and Mothae mines]." Lucapa hasn't yet found a location for its manufacturingventure, Wetherall noted. However, one option is Angola, which just opened anew facility. Additionally, the miner intends to maximize profits further byfocusing on its Lulo operations in Angola and its Mothae project in Lesotho.While Lucapa won't discontinue its Orapa or Brooking exploration projects, Wetherall said, ramping up production at the other two mines will takeprecedence. "Growing shareholder value is our major imperative, which, inthe current climate, we believe warrants a complete focus on our high-value andcash-generating assets," he stated. "We are still very enthusiastic about[the other] two assets, but at present, it is about creating shareholdervalue." While the company had originally expected to doublethe amount of ore it processes at Mothae by 2021, it now plans to bring that date forward. It is alsoset to increase production at Lulo this year by 25% - introducing an additionaloperating shift on the diamond treatment plant to process ore around the clock,the company said. The miner believes Lulo has significant potential to become a "world-class asset," Wetherall added. Image: Rough diamonds from Lulo. (Lucapa Diamond Company)